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Wednesday, 29 July 2015

Price (of goods or service) is determined at the point where
the demand curve meets the supply curve .
This was one of the first lesson of economics taught to us in junior
college. They’d still be doing the same, I guess.

A separate note may be required to illustrate that this
method of price determination has resulted in certain goods and services being priced
obnoxiously high or obnoxiously low. It may also be argued that because of
this, the social inequalities have widened further. Also, economic
sustainability of certain professions has come under serious threat,
irrespective of the fact that the services are life essentials. The income
potential of many service providers, in absolute terms is so low that it questions the sustainability a
society where price is determined by this mechanism. But this is a separate
subject in itself. We’re assuming its understanding for the purpose of this
note.

Academically, it may be argued that these anomalies will get
corrected over a period of time and such period shrinks as the information in
the market tends towards perfection. But it is this intermittent period, which
can create tension amongst the socio-economic classes of a society, which may
lead to unrest and even civil wars.

The government plays the role of lubricator to avoid
friction by taxing the ‘have’s’ and passing benefits to the ‘have not’s’ by way
of welfare programmes and subsidies. The risk of civil unrest aside, certain
members of the benefiting class of the society notice the apathy of the other
class. Some of them take a charitable view of the situation and either engage in roles similar to the government or convince buyers to pay higher prices by appealing
to the charitable nature of members in their own class. However, both the government
and the charitable class work to heal the symptom (social inequality).

A cursory observation is sufficient to infer that these
interventions by the government and non-government institutions haven’t healed
the symptom. Not because the idea is incorrect. But the rate at which the
inequality is increasing is far higher than the rate at which these
institutions are able to bridge the gap. The net gap thus keeps widening.

The question to be explored is this: Is it possible to fix
the method of price determination in such a way that the undesirable symptoms
are avoided? The answer, after due deliberation, appears to be ‘No’. The current
mechanism of price determination flows out of natural behaviour of human beings
living in a society. Any intervention by government or non-government
institutions to curb the undesirable symptoms of such behaviour has resulted in
additional, perhaps bigger problems like corruption and systemic
inefficiencies. It might even be argued
that these interventions, aimed at bridging the inequalities, themselves have
contributed to the increased gap.

What does all this mean in the current context? If one goes
by a a linear equation, it forecasts wider inequalities leading to social
unrest, leading to disruption of the current economic mechanism. Across many
countries & regions in the world, the social tension resulting from such
power struggle is being witnessed and is also threatening life. But societies
have never adhered to linear equations; and this fact is what keeps the hope
alive. The hope is that some new variables will alter the equation.

Village Swaraj is the culmination of Mahatma Gandhi’s view
on the subject. It outlines the working of an ideal society. Someone rightly
commented that such a society, which has attained swaraj, i.e. swa+raj
can only be created by individuals, who have attained control (raj)over their own individual selves (swa). From an economist’s perspective,
what are the characteristics of such a person? Let us attempt to understand
this. He is content with what he earns and owns. Greed does not urge him to
earn more and fear does not persuade him to own more. He does not view his
economic standing by comparing himself with fellow-members of the society.
Someone with more or less economic prosperity is viewed as the manifestation
of diversity amongst human beings.

If such individuals inhabit a society, the theory of village
swaraj may be witnessed in practice. Ironically, such a society will not
require the theory of village swaraj. It may turn out that description of what
one observes in such a society coincides with the theory of village swaraj.

How would such a society determine price? It would be
unacceptable in this society that a specialist surgeon charges Rs.10000 for a
day’s work, while the farmer sells his labour Rs. 200 per day. However, to
arrive at a fair price for every product and service is tough, almost an impossible
job. How then will price be determined? Such a society will leave the
responsibility of determining the price with the supplier. In case of multiple
suppliers / service providers, they may collectively arrive at fair price.
Buyers or service recipients will not question the pricing. In fact they will
receive the service with gratitude and at the same time bless the service
providers. There is no need for laws to ensure fairness.

Do such individuals exist? My guess is that most
individuals are intrinsically such. But the ones who are most likely to realise
such a society are the ones, who have the ability to swim against the tide.

We don’t fit into any ready mould. Neither in the mainstream
nor in the alternate sphere. This makes me feel lonely, but also relieved.
Relieved, because I’ve come to terms with this fact. Relieved, also because I’m
not obliged to adhere to any religion – Environmentalism, Nationalism, Humanism,
Consumerism, Capitalism, or any other religion or belief system with regard to
farming, education or social order. This may come as a surpris for a few of you
reading. You may have thought that I’ve a strong sense of ideology, but fact is
that I have no sense of identity in the belief systems of anti-capitalism,
anti-consumerism, anti-modernity and the like. I have no grudge against the
mainstream anymore.

I’m unable to connect with any group, but I feel very much
connected with every individual. I’ve discovered that all individuals are like
that. When I converse with one person, whether about economics of different
farming approaches or about education of children or about managing personal
finances or almost any other subect, the conversation is quite an open
communication. Both of us listen to each other. However, one more person joins
in, and the conversation gets dominated by fears, doubts, distrust and caution.
Of course, these emotions come to fore in the guise of practicality or
pragmatism. The flip-side of the discussions so far with individuals has been that
these turned out to be purely academic in nature. In every case, no action
emanated or was intended. Purely academic conversations become quite boring.

But I’m no longer scared of this loneliness. That does not
mean that I’m ok to stay lonely. It means that with time, I feel hopeful that
we will not be lonely. The thought of what our children will experience on this
front had been scaring me some time back, but the fear has been reduced a bit.
My father and brother have been telling me that we’ve shown strength and
determination in difficult situations. Things can only get better in future. I
feel confident of our physical and mental strength to wade through rough waters
– together. That helps me overcome fear. In the last few days, I’ve analysed
our finances as well and the assessment assures me that we are adequately
provided for even if we are unable to earn for the next 15-20 years.

What if we continue to remain lonely, despite our efforts to
be otherwise? Unlikely; because if I remain alone for a long enough time, I’d
have learnt to live alone – and that is not the same as being lonely!